Plosser: Too Early to Tell if Fed Will Complete Full $600 Billion Easing

Federal Reserve Bank of Philadelphia President Charles Plosser said it’s too early to assume the central bank will complete the $600 billion in Treasury purchases authorized by policymakers this month.

“It’s premature to presume the answer to that one way or another,” Plosser said yesterday in an interview with Bloomberg Television in Washington.

“A lot will depend on how the data begin to unfold over the next several months as to whether or not we think it’s necessary, whether the efficacy of the policy is doing what we thought it would do, whether we continue to think it’s necessary.”

Plosser, who will be a voting member of the Fed’s Open Market Committee in 2011, said before the Nov. 3 stimulus decision that he didn’t support additional asset purchases.

Today he said he would “not necessarily” try to halt the securities buying, saying his decision would depend on economic data.

He said the rise in Treasury yields in recent weeks is “not much” of a signal of any particular development.

“There are lots of things that have gone on,” including the U.S. midterm elections and renewed concerns in Europe over Irish debt, Plosser said.

Path of Economy

“It’s way too early for us to sort of read too much into any of this right now,” said Plosser, 62, a former University of Rochester economist who joined the Philadelphia Fed as its president in 2006.

“We need to let a little time pass and try to do a more measured assessment of what the effects of this policy are, and what they might be, and the path of the economy going forward.”

Some critics say the Fed’s asset purchases risk declines in the dollar.

“That was clearly not the intent of this policy,” Plosser said. Instead, it is intended to keep inflation from falling and boost growth, he said.

Separately yesterday, Plosser told reporters in Washington that regarding the monetary stimulus decision, “for me, the benefits were not large enough to outweigh the costs.”

“Obviously the decision of the committee was different,” Plosser said, saying the program is “conditional.”

“I take seriously that view that we will evaluate that policy on a regular basis. Depending on the path and state of the economy, we will make decisions as appropriate as we go along.”

Federal Reserve Bank of Philadelphia President Charles Plosser said it s too early to assume the central bank will complete the $600 billion in Treasury purchases authorized by policymakers this month.
It s premature to presume the answer to that one way or another, ...